Tesla Motors has confirmed that its cars have been authorized for a program that implements reservations of license plates for new energy vehicles in Shenzhen, China. This move by authorities is expected to promote electric vehicle growth in the country where Tesla has struggled with dismal sales.
China supporting electric car demand
Tesla indicated that prospective buyers of its Model S can immediately apply for the license plates under the program that reserves 20,000 tags per year in the southern city adjoining Hong Kong. For now, the procedure to get a license in Shenzhen includes a lottery or auction system to check pollution, making it quite hard to obtain. But now, people looking to buy an electric vehicle can get license plates without too much of a hassle.
Though Tesla buyers will still not be entitled to government incentives for new energy vehicles like sales tax exemptions and subsidies, the new campaign will aid Tesla in competing with BYD, an electric-car maker based in Shenzhen.
A ‘minor’ victory for Tesla
In response to the news from China, Tesla’s stock crossed the $200 barrier again, reports Bloomberg. In addition, analyst James Albertine of sell-side firm Stifel has reinstated his Buy rating on the stock with a price target of $400, the highest among Wall Street analysts. This suggests a “minor victory” for Tesla after its shares dropped 9.41% owing to the poor sales and management restructuring program in China, says Albertine.
The news comes after the U.S.-based EV maker decided to cut jobs in China as sales failed to deliver on the company’s expectations. Tesla announced its ambitious plans to sell almost 55,000 vehicles in China this year, which reflects its strong outlook for the future. However, the company was able to sell only 31,000 vehicles last year, below the targeted 35,000 units.
But Tesla, having launched its cars in China last year, is still new to the world’s largest auto market. Currently, the company owns nine stores and service centers in six Chinese cities. To achieve its target, the car maker has joined hands with China Unicom and Soho China to build electric car charging stations across the country.